Caza Oil & Gas (LON:CAZA) has secured a capital injection via a new convertible loan facility.
Up to US$5mln will be available and the initial draw-down will be for US$4mln. The first US$1mln is being transferred immediately and the next US$3mln is anticipated within the next 30 days.
The loan is being provided by Yorkville and Global Market Neutral Strategies SICAV. It is a two year loan and it carries interest at 8% per year, and interest can be paid in shares.
Partial conversions of debt into equity can be made during the loan period, with monthly conversions into shares capped at U$1mln each month. At the end of the loan period repayment of the outstanding principle will be paid in shares.
Caza has certain options to repay the loan in cash.
The company told investors that the facility represents the most cost effective and accessible form of financing in the current oil price environment.
It also revealed Apollo Investment Corp, another funding partner, has agreed to defer the determination of finance and performance covenants until September 30. This gives Caza added flexibility in its capital spending during the current period of low oil prices.
"We're pleased to announce this financing, which continues our good relationship with these investors,” said chief executive Mike Ford.
“The financing benefits Caza by providing additional capital and optionality at this time, particularly with the approval from Apollo to extend covenant determinations until the end of the third quarter.
“This provides the company with the flexibility to manage capital expenditures and other costs during this period of low oil prices and to delay future developments and non-commitment wells where appropriate in order to preserve future profits that may be associated with a price recovery."